While numerous specific concerns of CFIUS are classified, the body disclosed that it's looking at "the risks associated with Broadcom's relationships with third party foreign entities", as well as the "national security effects of Broadcom's business intentions with respect to Qualcomm", according to the letter, which was written by a Treasury Department official.
The United States Department of the Treasury said that the CFIUS now can look into Broadcom's acquisition plan in depth. However, many of Qualcomm's rivals, including Huawei Technologies Co Ltd, are Chinese.
The semiconductor industry is locked in a race to develop chips that power so-called 5G wireless technology. Such a move could hurt the USA effort to develop 5G wireless technology because of the small existing number of suppliers that build the hardware.
The letter said that, as with every investigation, the review will consider the potential risk of an unnamed "actor" working through Broadcom to hurt United States national security, adding that the bulk of CFIUS' concerns were classified.
"This can only be seen as an intentional lack of disclosure - both to Broadcom and to its own stockholders", Broadcom said. Qualcomm's opposition to the deal has diminished, but the company claims Broadcom's offer is still too low. "There is now a recognition in government that foreign investors, particularly from China, are getting more and more sophisticated on how they get access to technology in the U.S".
The letter from the Committee on Foreign Investment in the U.S. (CFIUS) lays out a case why the acquisition could threaten the U.S. position in wireless communications standards, patents, and products - potentially to the benefit of China.
Reuters reported last week that CFIUS had begun looking at Broadcom's bid as pressure grew from politicians, including senior Republican U.S. Senator John Cornyn. On the first, it seems to assume Qualcomm is the monopoly producer of 5G technology; at a minimum this ignores the role that Intel and others may play.
Cornyn said on March 5 he was glad CFIUS had made a decision to review the deal, noting that "some of our worldwide rivals, like China, have been incredibly aggressive and strategic".
The deal was expected to face tough scrutiny from competition regulators.
CFIUS' intervention was unusual in that the panel typically reviews signed deals. Investors were scheduled to vote Tuesday on six Broadcom nominees, potentially giving it a majority of Qualcomm's board.
A source familiar with CFIUS' thinking told Reuters on 5 March that if Broadcom acquired Qualcomm, the United States military had concerns that within 10 years "there would essentially be a dominant player in all of these technologies and that's essentially Huawei". CFIUS rules allow a company facing an unsolicited takeover bid to request a CFIUS review, so that its board of directors can better assess the regulatory risk of a deal.